1. Which of the following is an example of the I'direction\" aspect of governance? a] Management informs the board about the results of a reoent compliance audit. b} Management develops a standard exception re port to identify metrics that fall outside of acceptable ranges. c] Board agenda packages include highlights from key functional areas of the business. d} The board holds a weekend session with management to set organizational priorities for the next ve yea rs. 2. Which of the following statements regarding governance is true? a] in situations where the interests of the organization and the interests of stakeholders diverge, the board's greatest obligation is to the primary sta keholderls]. b} Historically, oorporate governance had been heavily focused on meeting the needs of shareholders, but the focus has broadened. c] Because notforprot boards are usually made up of volunteers, they have less legal obligations than corporate boards. cl} Governance concerns are limited to large public companies and notforprot organizations. 3. Which of the following statements regarding the internal audit function of an organization is true? a] Board decisions may be heavily influenced by the results of internal audits. b} Internal auditors must be as independent as external auditors. c] Internal auditors are always employees of the organization. cl} To ensure that audit results are addressed objectively, the internal audit function should report directly to the CEO. 4. Basic Inc. is a large and very profitable company whose shares trade only in Canada. Its board members are paid a higherthanaverage compensation package for their service. Which of the following is most likely to prese nt a governance challenge for the company? a] Attracting qualied board members b]: Complying with the specic requirements of the Sarbanesxley Act c] Ensuring that board members commit sufcient time to their duties d} Finding individuals to ll the nominee director positions 5. Which of the following statements regarding the external auditor's role in governance is true? a] All problems in internal oontrols found by an external auditor must be reported to the audit committee. b} During an audit, communication is oneway, in that the external auditor advises those charged with governance on how to make improvements. c] Stakeholders expect the organization to receive a qualied audit opinion; therefore, management is motivated to respond to concerns raised by the external auditors. d} Because the audit opinion is received by shareholders, the audit is an integral element of monitoring and control